Personal Holiday Letter
I have to admit that for the first time in my academic career, at around 4 am on Wednesday 9 November 2016, the thought came to my mind that there is no hope. It then seemed clear that Donald Trump will become the next president of the US. The man who has said that climate change is a hoax invented by China, who wishes to pull the USA out of the Paris Agreement, downscale the US Environmental Protection Agency, withdraw Obama’s ‘Clean Power Plan’, and promote coal and oil exploited with unconventional methods, is to lead the US the next four years. And Trump is currently putting together an administration in line with those signals.
Estimates based on Clinton’s and Trump’s political plans indicate a strong growth in greenhouse gas emissions from the US under the Trump administration. Already before Trump we knew that it would be very demanding to achieve the fundamental goals of the Paris Agreement: to keep global warming well under two degrees Celsius and preferably down to 1.5 degrees, compared to preindustrial time. The climate is one of the nine planetary boundaries within which we need to stay if we are to achieve a safe operating space for humanity. How could there now be any hope with such a large global actor on collision course with a sustainable future? Also in other parts of the world, Europe included, we see an upswing of xenophobia and violence, and we see science, free speech, critical journalism and the truth under attack across the world. A depressing picture, indeed.
After a few hours I realised that of course there is hope. As regards the climate, there has not been one single country that has said that if the USA pulls out they will follow. The new course on climate that the incoming President has signalled might cause turbulence within the global climate negotiations with some potential opportunistic behaviour from less climate progressive nations, but represents equally an opportunity for other nations to take the lead.
As regards sustainability more broadly, there are forces internally in the USA and across the world: local governments, civil society, businesses, investors and individuals, who continue working to meet the grand challenge of securing a social foundation for people everywhere now and in the future, while staying within the planetary boundaries.
The market actors that SMART focuses on are crucial, with investors a case in point. Investments in renewable energy projects and other innovative, environmentally and socially friendly and sustainable business ideas will be decisive if we are to achieve the UN Sustainable Development Goals. For example, an analysis undertaken by DNV GL: Future of Spaceship Earth, Business frontiers, shows that access to finance is a critical barrier in the transition from fossil to renewable energy: a large number of investors is needed to increase available capital and reduce capital costs. World Business Council for Sustainable Development (WBCSD) has just released its report Pathways to scale finance for renewable energy. This is a part of WBCSD’s Rescale initiative, where a number of large businesses around the world go together to speed up the transition from fossil to renewable energy.
Also under a Trump administration foreign investments in profitable projects and new work places will be welcome. Also under a president who rejects climate science, investors withdrawing from fossil fuelled projects will have an impact. A critical mass of powerful financial institutions and large investors is needed that are willing to shift from ‘business as usual’ and onto a renewable and sustainable path. According to the MIT Sloan School of Management report Investing For a Sustainable Future: Investors Care More About Sustainability than Many Executives Believe, more than 70 per cent of the interviewed investors state that ‘sustainability performance’ is a central factor when making investment decisions.
SMART is more important now than ever. One example is the link between investors’ alleged willingness to invest sustainably and their possibilities for doing so. Investors rely on information about businesses to make their investment choices. Business reporting is an important source of information. Sustainability reporting tends generally to be unverified and accordingly neither reliable nor relevant. There is a missing link between what corporate boards perceive as their duty and what business is asked to report on, which together with lack of enforcement of the reporting requirements and of verification of the information that is reported on, undermines the possibility of reporting that will be ‘vital to managing change towards a sustainable global economy’ (quote from the preamble of the EU’s Non-Financial Reporting Directive). Our ongoing research in this area will identify the changes that need to be made in sustainability reporting regimes to realise the potential of business and finance to contribute to sustainability.
Research on reporting, and on business and investor choices, is of course just one part of SMART. We promise a comprehensive, systemic and interdisciplinary analysis of the regulatory complexity of market actors across international, European and national regimes. We will contribute the research that is needed to achieve policy coherence for a sustainable global development. And we will be ready to respond to and criticise incoherencies like Norway’s largest and partly state-controlled investors’ involvement in the North Dakota pipeline, in blatant contradiction to Norway’s high climate ambitions and ethical standards.
To achieve the SMART goals of contributing to meeting the grand challenge of sustainability and through that responding to the EU’s call for greater policy coherence for development, the continued hard work by every scholar in the SMART team is a prerequisite. And the SMART team in turn depends on the wonderful network of scholars supporting SMART as well as our fantastic group of stakeholders.
In 2017 we look forward to a wide range of SMART events, including our Helsinki conference on Sustainable and Efficient Transport Systems, our Oslo conferences on Taxation and Sustainable Development and on International Trade and Investment, and other events under planning in Copenhagen, Madrid, Sheffield and Brussels. Most of all we look forward to engaging more deeply with our colleagues and stakeholders, and learning more about how we can move forward together, in spite of all counter-pressure.
To be able to put together all of the pieces of the jigsaw puzzle of sustainability, unprecedented and innovative collaboration across and beyond academia, politics, business, finance and civil society is necessary. Every one of you is important. Thank you for your support in 2016. I look forward to making 2017 a great year for sustainability together with you.
Warmest wishes and season’s greetings to all,
Beate Sjåfjell
Coordinator of SMART
